French rogue trader's appeal trial starts today

Coverage of Kerviel trial

After the London Whale and the JP Morgan trading loss, another Frenchman is — again — in the news: Former Société Générale trader Jerome Kerviel, who was at the heart of a trading adventure that resulted in the €4.9 billion loss ($6.4 billion) for the second largest French bank in 2008.

Kerviel had amassed €50 billion in unauthorized positions concealed with faked hedges. He was sued by his employer and on Oct. 5, 2010 found guilty of breach of trust, computer abuse and forgery. Kerviel was sentenced to a three-year prison term and ordered to repay the full amount of the loss that the bank incurred while unwinding the trades. His sentence has been suspended pending his appeal.

Alone or not?

Though the young trader (now 35) never denied that his trades and his actions to hide them were fraudulent, he claims that he didn't act alone. According to Kerviel, his superiors knew about what he says was “common practice at the bank.” The lower court judges rejected his arguments.

It remains to be seen if the new trial will bring Kerviel what he wants: A dismissal of his case and an apology from his former employer.

David Koubbi, his new lawyer – Kerviel has been through two already – promises new evidence, new witnesses, and new arguments during the appeal trial. So far, his main pitch for a reversal is still that his client didn't act alone. Koubbi also wants to at least recalculate the loss suffered by Société Générale, and underlines the fact that the bank got a tax credit of €1.7 billion for the €4.9 billion loss. “To start with, the way the loss was assessed is wrong,” he said. The bank already has hinted that it didn't expect the rogue trader to repay anything. Whatever the amount, the order to repay was symbolic, as are many other things in this scandal.